The subsidy of loans secured against the borrower’s main residence, provided through the Finance Ministry’s “Gefyra 1” program, has been extended by another three months, but reduced to about half of the original amount.
The Gefyra 1 program subsidizes nine monthly tranches payable by over 74,000 borrowers hurt by the pandemic. The measure was introduced at end-August 2020 with a deadline for inclusion at end-December 2020. It was supposed to expire by end-September 2021 for everyone, but the measure has now been extended by another three months, to the end of this year.
This provision, announced by Prime Minister Kyriakos Mitsotakis earlier this month in Thessaloniki, has been agreed with the country’s creditors and is set to be tabled in Parliament in the next few days.
Sources say that the regulation to be submitted will provide for a 40% state subsidy of every monthly installment for another three months of the loans that are being serviced. Until end-September the subsidy ranged from 90% in the first quarter to 70% in the third; likewise the state subsidy of nonperforming mortgages will come to 35% of each tranche, after easing from 80% in the first quarter to 60% in the third. As for the loans banks had terminated, the subsidy will amount to 20%, after ranging from 60% of each tranche in Q1 to 30% in Q3.
Gefyra 1 has so far provided substantial support to households, having also assisted banks in their effort to rearrange the debts of borrowers who suffered problems due to the health crisis caused by the pandemic, or even bad loans.
Inclusion in the program requires that borrowers continue to pay the full monthly tranche after the expiry of the subsidy period.
Based on the latest Finance Ministry figures, by the end of September when 90% of the tranches of the Gefyra 1 program subsidies will have been completed, the government will have paid out some 230 million euros. That leaves another €70 million to spend from the original budget of €300 million, which will cover the three remaining months.